UK retail sales fell by 0.1% month-on-month in November after falling by 0.9% in October (revised from -1.1%), according to the latest data published by the Office for National Statistics (ONS) on Friday.
Markets expected a 0.4% rise in the aforementioned month.
Core retail sales, which deducted motor fuel sales, fell 0.2% month-over-month in November, compared to a previous decline of 0.8% (revised from -1.0%). This figure was lower than market expectations of an increase of 0.2%.
Annual UK retail sales rose 0.6% in November versus 0.6% previously (revised from 0.2%), below expectations of 0.9%. Annual core retail sales rose 1.2% in the same month versus a previous rise of 1.6% (revised from 1.2%). This reading was worse than market expectations of 1.6%.
Market reaction to UK retail sales report
The British pound fell slightly after the release of a downbeat British retail sales report. GBP/USD is trading 0.01% higher on the day at 1.3380 at the time of writing.
The price of the British pound today
The table below shows the percentage change of the British Pound (GBP) against the major currencies listed today. The British pound was the weakest against the US dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.04% | -0.00% | 0.30% | 0.05% | 0.06% | 0.18% | 0.12% | |
| euro | -0.04% | -0.04% | 0.27% | 0.02% | 0.02% | 0.15% | 0.08% | |
| GBP | 0.00% | 0.04% | 0.31% | 0.06% | 0.06% | 0.19% | 0.12% | |
| JPY | -0.30% | -0.27% | -0.31% | -0.25% | -0.24% | -0.13% | -0.19% | |
| Canadian | -0.05% | -0.02% | -0.06% | 0.25% | 0.00% | 0.11% | 0.06% | |
| Australian dollar | -0.06% | -0.02% | -0.06% | 0.24% | -0.00% | 0.12% | 0.06% | |
| New Zealand dollar | -0.18% | -0.15% | -0.19% | 0.13% | -0.11% | -0.12% | -0.07% | |
| Swiss franc | -0.12% | -0.08% | -0.12% | 0.19% | -0.06% | -0.06% | 0.07% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the British pound from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Frequently asked questions about the pound sterling
The British Pound (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most popular foreign exchange (FX) trading unit in the world, accounting for 12% of all transactions, averaging $630 billion per day, according to data for 2022. The main trading pairs are GBP/USD, also known as “Cable”, which accounts for 11% of FX, GBP/JPY, or “Dragon” as traders know it (3%), and EUR/GBP (2%). The pound sterling is issued by the Bank of England (BoE).
The single most important factor affecting the value of the pound sterling is the monetary policy decided by the Bank of England. The Bank of England bases its decisions on whether it has achieved its primary objective of “price stability” – a stable inflation rate of around 2%. The primary tool for achieving this is adjusting interest rates. When inflation is too high, the Bank of England will try to rein it in by raising interest rates, making it more expensive for individuals and businesses to obtain credit. This is generally positive for the pound, as higher interest rates make the UK a more attractive place for global investors to put their money. When inflation falls to a very low level, it is a sign that economic growth is slowing. In this scenario, the Bank of England would consider lowering interest rates to reduce the cost of credit so that companies borrow more to invest in growth-generating projects.
Data releases measure the health of the economy and can affect the value of the British pound. Indicators such as GDP, manufacturing PMIs, services and employment can all influence the direction of the pound. A strong economy is good for the pound. Not only does it attract more foreign investment, but it may encourage the Bank of England to raise interest rates, which will directly strengthen sterling. Otherwise, if economic data is weak, the British pound is likely to fall.
Another important data release for the British Pound is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a certain period. If a country produces highly sought-after exports, its currency will take full advantage of the additional demand generated by foreign buyers seeking to purchase these goods. Therefore, a positive net trade balance strengthens the currency and vice versa for a negative balance.
